Brussels looks to exempt vital EU services from VAT
Protective equipment
(BRUSSELS) - The European Commission proposed Monday to exempt from VAT goods and services made available by the Commission, EU bodies and agencies to Member States and citizens during times of crisis.
Experience gained during the course of the Coronavirus pandemic shows, says the Commission, that the Value Added Tax charged on some transactions ends up being a cost factor in procurement operations that strains limited budgets. It says the new initiative will maximise the efficiency of EU funds used in the public interest to respond to crises, such as natural disasters and public health emergencies. It will also strengthen EU-level disaster and crisis management bodies, such as those falling under the EU's Health Union and the EU Civil Protection Mechanism.
Once in place, the EU execuitve says the measures will allow it and other EU agencies and bodies to import and purchase goods and services VAT-free when those purchases are being distributed during an emergency response in the EU. The recipients might be Member States or third parties, such as national authorities or institutions (for example, a hospital, a national health or disaster response authority). Goods and services covered under the proposed exemption include, for instance:
- diagnostic tests and testing materials, and laboratory equipment;
- personal protective equipment (PPE) like gloves, respirators, masks, gowns, disinfection products and equipment;
- tents, camp beds, clothing and food;
- search and rescue equipment, sandbags, life jackets and inflatable boats;
- antimicrobials and antibiotics, chemical threat antidotes, treatments for radiation injury, antitoxins, iodine tablets;
- blood products or antibodies;
- radiation measuring devices;
- development, production and procurement of necessary products, research and innovation activities, strategic stockpiling of products; pharmaceutical licences, quarantine facilities, clinical trials, disinfection of premises, etc.
"The COVID-19 pandemic has taught us that these kinds of crises are multifaceted and have a wide-ranging impact on our societies," said Economy Commissioner Paolo Gentiloni: "A rapid and efficient response is essential, and we need to provide the best response now in order to prepare for the future. Today's proposal supports the EU's goal to react to crises and emergencies in the EU. It will also ensure that the financial impact of EU-level relief efforts to fight the pandemic and support the recovery is maximised."
The legislative proposal, which will amend the EU's VAT directive, will now be submitted to the European Parliament for its opinion, and to the Council for adoption.